Perusia Limited presents the following balances in its financial statements for the years ended 31 March 2019 and 31 March 2018:
$\begin{array}{lcc}
&2019 & 2018 \
&£ & £ \
\text { Interest payable accrued at the end of the year } &1,084 & 988 \
\text { Statement of profit or loss interest payable } &13,108 & 12,572\
\text { (finance expense) for the year }
\end{array}$ Based on these figures, what interest paid figure will be disclosed by Perusia Limited in its statement of cash flows for the financial year ended 31 March 2019?

Question

Perusia Limited presents the following balances in its financial statements for the years ended 31 March 2019 and 31 March 2018:
$\begin{array}{lcc}
&2019 & 2018 \
&£ & £ \
 \text { Interest payable accrued at the end of the year } &1,084 & 988 \
 \text { Statement of profit or loss interest payable  } &13,108 & 12,572\
 \text { (finance expense) for the year } 
\end{array}$ Based on these figures, what interest paid figure will be disclosed by Perusia Limited in its statement of cash flows for the financial year ended 31 March 2019?

Quizplus · Accepted Answer

The interest paid can be calculated by adjusting the finance expense (interest payable for the year) with the change in the accrued interest payable. For the year ended 31 March 2019, the calculation is as follows: Interest expense for the year (£13,108) + Increase in accrued interest payable from 2018 to 2019 (£1,084 - £988 = £96). Therefore, the interest paid is £13,108 + £96 = £13,204. However, due to a calculation mistake in my explanation, the correct calculation should be: Interest expense for the year (£13,108) + Increase in accrued interest payable from 2018 to 2019 (£988 - £1,084 = -£96). Therefore, the correct interest paid is £13,108 - £96 = £13,012.

Perusia Limited Presents the Following Balances in Its Financial Statements